Problem 17.29 Sell or Process Further

come Problem 17.29 Sell or Process Further OBJECT Pharmaco Corporation buys three chemicals that are processed to produce two popular ingre- dients for liquid pain relievers. The three chemicals are in liquid form. The purchased chemicals are blended for two to three hours and then heated for 15 minutes. The results of the process are two separate ingredients, PRI and PR2. For every 4,300 gallons of chemicals used, 2,000 gallons of each pain reliever are produced. The pain relievers are sold to companies that process them into their final form. The selling prices are $34 per gallon for PRI and S45 per gallon for PR2, The costs to produce one batch (containing 2,000 gallons of each chemical) are as follows: 0 Chemicals Direct labor Catalyst Overhead $23,400 9,000 3,600 8,000 The pain relievers are bottled in five-gallon plastic containers and shipped. The cost of each con- tainer is $2.10. The costs of shipping are $0.50 per container. Pharmaco Corporation could process PR1 further by mixing it with inert powders and fla- voring to form tablets. The tablets can be sold directly to retail drug stores as a generic brand. If this route is taken, the revenue received per case of tablets would be $13.50, with eight cases (continued)